The year-on-year doubling of EBITA in H118 reflects continued strong underlying organic growth at GB Group (LON:GBGP), boosted by recent acquisitions and a perpetual licence deal. H2 has started well and forecasts, which are largely unchanged, appear comfortably underpinned. GBG’s consistent organic performance and increasing product innovation support its current rating, meanwhile its buy and build strategy could support further earnings-driven share price upside.
Excellent first half result
H1 results were as preannounced in October’s trading update. Revenues increased 40% y-o-y and EBITA of £10.4m doubled. The strong performance reflects the initial contribution from the acquisition of PCA Predict in May and a full six months from ID Scan, both of which continue to perform ahead of management’s expectations. Headline organic growth of 18% and EBITA margins of 19.8%, which were up 6pp on last year, were boosted by a £3.5m licensing deal. Backing this out, the underlying organic growth rate remains a consistent 12%, and margins were broadly flat year on year. Cash conversion at 92% remains high.
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